As 2026 kicks into full swing, sorting out your life insurance policy may be less glamorous than other New Year’s resolutions you’ve made.
But getting the right cover for your needs can bring peace of mind to you and your loved ones – and might help reduce your Inheritance Tax (IHT) liabilities too.
Inheritance questions
With the IHT threshold frozen in place for more than a decade, some families seeking to reduce the size of their taxable estates have been turning to life insurance, research* suggests.
After the Government made more assets subject to IHT, including business property and agricultural property – both assets traditionally passed on as inheritance – the appeal of life insurance has come into sharper relief for many.
Life insurance sales for IHT planning have increased significantly, with total premiums surging by 18% to £447m in the year ending March 31 2025, up from £378m the previous year.
Faced with a growing list of taxable assets, people are thinking harder about how to minimise their tax bill.
Protection and a lower tax bill
Life insurance provides support for your loved ones when you are no longer around, ensuring they have full financial resilience.
Moreover, life insurance is tax efficient, as payouts are free from Income Tax and Capital Gains Tax, and when held within specific types of trusts, they can also be exempt from IHT. Time for a life insurance review?
- Contact Cailean to discuss your IHT planning at hello@cailean.co.uk or on 01577 212577.
* How life insurance can help protect estates from IHT – TWM Solicitors, October 2025
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. The Financial Conduct Authority does not regulate will writing, tax and trust advice and certain forms of estate planning. Financial protection policies typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.